Qmont Mining Case

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3) Buyer power is considered to be low. According to Porter’s five forces industry analysis, buyer power is one of the forces that shape the competitive structure of an industry. However, in this case, Qmont Mining itself is the buyer. In the company analysis and based on the supply issues the company faces, the buyer’s bargaining power level is low because they do not have a strong relationship to each of their suppliers. They make multiple orders from many different suppliers no matter what the costs and receive identical products in return. In addition, as Qmont switches from a supplier to another one, their demand is not frequent nor stable. Their ability to negotiate pricing and services becomes diminished as a result.

4) The threat of substitutes for metal and metal products is low because metals are a commodity that is not easily substitutable. Although the use of other metals have been rising continuously in construction and manufacturing sector, such as in the automobile industry, it still does not pose any significant threat to metal as the latter cannot be replaced completely and the cost differential is also very high.

5) The threat of new entry is low due to the high barriers, the regulations imposed by the Government, and the high barriers to entry due to capital requirements and associated costs for starting new projects. From the Government standpoint, the barriers mainly concern the protection of the environment. The mining industry is not known for its environmental stewardship, and the Government as a representative of the general public and a defendant of the environment has put high barriers to new entrants and increased requirements for companies already in operation. There are several hurdles to get through before acquiring an operating license.

External Analysis: ETOP Analysis

Social Analysis

Many opportunities for a company to enhance its image towards the public by being engaged with the community and being transparent about their operations. Improving their relationship with the public may also lead to success towards their bottom line.

However, the social requirements and the company's’ expectations are not always similar. For mining companies like Qmont Mining, there is often a disagreement between them and the local community. Principally with environmental groups. Mining companies are often associated with pollution and poor environmental habits due to the type of operations they conduct. Therefore, Canadian companies in particular, increasingly consider the social impacts of their projects to mitigate such conflict. This results in a lot of money, focus, and energy being spent on building a positive relationship with the community. In the past, at least with some less reputable companies, this was not a priority.

Political Analysis

As a mining company the Government touches different aspects of their operations. First of all, Qmont has the obligation to possess the rights to access and exploit each land where they are operating. For instance, the government requires a land exploitation license and Qmont needs the agreement of the Government to deliver a license to transport their products. Mining companies must undergo governmental reviews and approvals in addition to the licensing requirements of their provincial and territorial jurisdiction. These licensing requirements involve environmental implications, such as “...major mining projects in provinces are subject to the Canadian Environmental Assessment Act (CEAA) as well as parallel provincial assessments and, depending on the details of the project and the mine site, they may require approvals under other federal legislation, such as the Fisheries Act and the Navigation Protection Act.” (+source) Amongst many other political factors, Qmont has to pay provincial and governmental taxes as well.

Economic Impacts

Regarding the economic impacts, Qmont Mining creates direct and indirect jobs which are favorable for the growth of the regional and national economy. These jobs include workers operating generally in mine exploration, the transport of mine output, and the different managers and administrative staff. Beyond this the mining industry, indirectly, provides jobs within the supply network. Generally, for a large company as Qmont, there is a long list of people and companies that are directly and indirectly associated with their operations. It is important to recognize that the mining industry is volatile, which means the value of their product could be more or less than the cost of producing them due the instability of the global economy.

Technology

The main concern for mining companies is exploiting new technology for better profits. The competitiveness of these companies depends on innovation, credited with being the main economic growth factor in western world. New technology generates significant public and private returns.

Internal Analysis

When analyzing Qmont Mining’s internal organization, it is seen that the company is facing several issues that should be solved immediately in order to achieve its goals.

First of all, there is a lack of communication. Since Qmont Mining is a decentralized entity, it is difficult for the coworkers to communicate between themselves. That is the main reason why people on the field are able to order parts and other materials directly to the suppliers without consulting the managerial department. Consequently, due the lack of communication, the company’s staff work on a day-to-day basis without any forecast plan. They work on an operational but not strategic base. In addition, there is a lack of financial information. On the field, while workers are able to order supplies directly from the suppliers, the accounting department pays suppliers invoices without any confirmation. Furthermore, when the company orders the same part from many suppliers, they get extra supplies which force them to store it onsite. However, not only does the costs of the freight is multiplied, without considering the costs of the transport, but storing those parts is not free either. Also, when supplies are left there for a long time, their value diminishes. Hence, this is not beneficial for the company.

When receiving the supplies, the personnel do not consider checking their supplies, no date stamped, no signature, no confirmation that the deliveries were made at such time. Due to these tangled functions, the company’s loss is more than its profits. Furthermore, Qmont Mining has multiple suppliers, which